With the German industrial economy showing signs of real growth this year, Electronics Weekly asked Patrick Zammit, Avnet's European president for a German perspective on the upturn in the electronics components market.
“I honestly don’t see any major risks,” says Zammit.
He believes there may be some concern how the automotive market will adjust after the effects of the scrappage schemes, which stopped earlier in the year, work themselves out.
“But the industrial market looks strong, I see no major risks here,” says Zammit.
“Last year customers reacted quickly to the change in demand and the market in Europe adjusted to the inventory correction, possibly a little too much. So we saw some inventory replenishment earlier this year,” points out Zammit.
“But I see no inventory build-up in the supply chain. As I see the pressure on the supply side remaining,” says Zammit.
The European distribution market looks like it could grow at more than 30% this year.
It is undeniable that the European components market has bounced back surprisingly quickly.
In many cases suppliers have even wiped out last year's fall in sales.
Zammit says the relative weakness of the Euro against the dollar helped European manufacturers in the first half of the year.
Although as the German economy gets stronger, we are now seeing the Euro rise in value against a weaker dollar.
"The industrial sector in particular is highly dependent on exports to the US and a weak Euro makes us more competitive," says Zammit.
"We are now seeing production coming back," adds Zammit.
“We are seeing some investment in people in some markets. I believe the upturn is sustainable, but perhaps only in specific markets,” he adds.
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